Sep
2
Even with the recent declines in crude oil prices, airlines appear to be continue set with their plans to reduce the number of flights they operate.
Finally, airlines are starting to think like real businesses! Can you believe it? They are actually going to pursue profits!
Now that the massive overstocking by China, as they prepared for the Olympics, is over and prices have moved down around $20 per barrel you might think that the airlines would delay their flight reduction plans. But no, and Wall Street is predicting that the major carriers could soon return to profitability.
Based on the Official Airline Guide (OAG) estimats it looks like US domestic flights will be reduced by 20 million seats from Nov-Dec. Worldwide it looks like a 7% drop in capacity will result in almost 60 million fewer seats during the same period. OAG said this decrease could result in “the most widespread crisis to hit the aviation industry in recent memory.”
Some airlines had planned on expanding flights during 2008, but high fuel costs have put a damper on those plans. Continental wanted to grow 5-7% this year but is now looking at maybe a 2-3% growth rate. The fast growing JetBlue CEO David Barger expects a 10% year over year decrease.
Routes Dropped: Nov 2007 -VS- Nov 2008:
- Midwest Airlines = 43%
- Delta = 24%
- US Airways = 15%
- Continental = 14%
- American = 10%
- United = 4%
- Southwest = 0.5%
But many of these reductions are not due just to increased fuel costs, some of it is the result of a reduced demand for air travel. The steady annual growth since 2002 appears to be coming to an end, an abrupt end as the US and global economies effect travelers and business spending habits.
Many vacationers are becoming aware of what is now called the Stacation option and are saving fuel, reducing the environmental impact and saving money during this economically sensitive time.
UPDATE: Southwest has just announced they will be jumping on board the flight cutting bandwagon. This year Southwest was able to control fuel costs because they had made several long term supply contracts at lower prices. But next year they plan on cutting nearly 200 flights. Southwest still plans on adding 14 new planes in 2009 with older aircraft being retired.
